MISSION, VISION & VALUES

VALUESINTEGRITY
We uphold ourselves with professionalism, honesty and sincerity to deliver what we promised through adopting best practices.

CUSTOMER FOCUSED
We are trusted and reliable partner to all our clients.
We deliver what we promise.

TEAM WORK AND BONDING
We practice effective and open communication and seek co-operation and collaboration among all team members to achieve desirable goals.

PROGRESS AND GROWTH
We are self-driven, passionate and responsible for our work to achieve the expected Key Performance Indicators through continuous learning and upgrading of knowledge and skills.

INNOVATION
We always look for ways to do things effectively and efficiently.
We embrace change with courage, flexibility and adaptability.

(Extracted from the Annual Report 2018)

CORPORATE GOVERNANCE

Union Steel Holdings Limited (the "Company") and its subsidiaries (collectively, the "Group") are committed to set corporate governance practices in place which are in line with the recommendations of the Code of Corporate
Governance 2012 (the "Code") to provide the structure through which the objectives of protection of shareholders'
interest and enhancement of long term shareholders' value are met.

This report sets out the Group's main corporate governance practices which were in place throughout the financial
year ended 30 June 2018 or which will be implemented and where appropriate, we have provided explanations for
deviation from the Code.

BOARD MATTERS

Board's Conduct of its Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the company.
The Board is collectively responsible for the long-term success of the company. The Board works with
Management to achieve this objective and the Management remains accountable to the Board.

The Board's primary role is to protect and enhance long-term shareholders' value. Its responsibilities are
distinct from Management responsibilities. It sets the overall strategy for the Group and supervises executive
Management. To fulfil this role, the Board sets strategic direction, establishes goals for Management and
monitors the achievement of these goals, thereby taking responsibility for the overall corporate governance of
the Group.

In addition to its statutory duties, the principal functions of the Board are:

Approving policies, strategies and financial objectives of the Company and reviewing Management's
performance;

Overseeing the processes for evaluating the adequacy of internal controls, risk management, financial
reporting and compliance;

Approving nomination and appointment of directors, committee members and key personnel; and

All Directors objectively discharge their duties and responsibilities at all times as fiduciaries and take decisions
in the interests of the Company.

To assist in the execution of its responsibilities, the Board has established a number of Board Committees,
namely the Audit Committee ("AC"), the Nominating Committee ("NC") and the Remuneration Committee
("RC") (collectively "Board Committees"). These Board Committees function within clearly defined terms
of reference and operating procedures, which are reviewed on a regular basis to ensure their continued
relevance. The effectiveness ofeach Board Committees is also constantly monitored.

The Board currently holds at least 4 scheduled meetings each year. In addition, it holds additional meetings
at such other times as may be necessary to address specific significant matters that may arise. Important
matters concerning the Group are also put to the Board for its decision by way of written resolutions. The
Company's Constitution has provision for Board meetings to be held via telephone or videoconference.

The following table discloses the number of meetings held for Board and Board Committees and the
attendance of all Directors for the financial year ended 30 June 2018:

Note:
(1) Mr. Goi Kok Neng was appointed as the Non-Executive Director on 12 January 2018.

The Board has adopted a set of internal guidelines setting forth matters that require Board approval. Matters
which are specifically reserved for the Board's decision are those involving significant acquisitions, disposals
and financing proposals, reviewing and approving the Group's corporate policies, monitoring the performance
of the Group and transactions relating to investment, financing and legal and corporate secretarial. The
Management understands that these matters require approval from the Board. The Board will review these
internal guidelines on a periodic basis to ensure their relevance to the operations of the Company. Directors
are required to act in good faith and discharge their fiduciary duties and responsibilities in the interest of the
Company at all times.

The Directors are also updated regularly on changes to the Singapore Exchange Trading Securities Limited
("SGX-ST") listing rules, risk management, corporate governance, insider trading and the key changes in the
relevant regulatory requirements and financial reporting standards and the relevant laws and regulations to
facilitate effectively discharge of their fiduciary duties as Board or Board Committee members.

News releases issued by the SGX-ST and the Accounting and Corporate Regulatory Authority ("ACRA") which
are relevant to the Directors are circulated to the Board. The Company Secretaries would inform the Directors
of upcoming conferences and seminars relevant to their roles as Directors of the Company. Annually, the
external auditors ("EA") update the AC and the Board on the new and revised financial reporting standards
that are applicable to the Company or the Group.

The Company has an orientation programme for all new Directors and also for Directors to attend any
appropriate training programme in order to discharge their duties as Directors.

Directors are encouraged to attend seminars and receive training to improve themselves in the discharge of
Directors' duties and responsibilities. Changes to regulations and accounting standards are monitored closely
by the Management. To keep pace with such regulatory changes, the Company provides opportunities for
ongoing education and training on the Board processes and best practices as well as updates on changes in
legislation and financial reporting standards, regulations and guidelines from the SGX-ST Listing Rules that
affect the Company and/or the Directors in discharging their duties.

Newly appointed Directors will be briefed by the Management on the business activities of the Group,
governance policies, policies on disclosure of interests in securities, the rules relating to disclosure of any
conflict of interest in a transaction involving the Company, prohibitions in dealing in the Company's securities
and restrictions on disclosure of price sensitive information. In addition, the Management regularly updates
and familiarises the Directors on the business activities of the Company during the Board meetings.

A formal letter of appointment would be furnished to every newly appointed Director upon their appointment
explaining, among other matters, their roles, obligations, duties and responsibilities as member of the Board.

Board Composition and Balance

Principle 2: There should be a strong and independent element on the Board, which is able to exercise
objective judgement on corporate affairs independently, in particular, from Management and 10%
shareholders. No individual or small group of individuals should be allowed to dominate the Board's
decision-making.

Note:
(1) Mr. Goi Kok Neng was appointed as the Non-Executive Director on 12 January 2018.

There is presently a strong and independent element on the Board. Half of the Board is made up of
Independent Directors and the independence ofeach Director is reviewed by the NC. The criteria for
independence are determined based on the definition as provided in the Code and the independence ofeach
Director is reviewed annually by the NC. The Board considers an independent Director as one who has no
relationship with the Company, its related companies, its substantial shareholders or its officers that could
interfere, or be reasonably perceived to interfere, with the exercise of the Directors' independent business
judgment of the Group's affairs. The NC has reviewed the independence ofeach Independent Director and is
of the view that these Directors are independent.

In line with Guideline 2.4 of the Code, the NC has conducted a rigorous review on the independence of the
Independent Director, Mr. Siau Kai Bing and has considered that Mr. Siau Kai Bing is independent even
though he has served on the Board beyond 9 years. The relevant factors that were taken into consideration in
determining the independence of Mr. Siau Kai Bing are set out in Principle 4 below.

The Board considers that the present Board size and number of Committees facilitate effective decisionmaking
and are appropriate for the nature and scope of the Company's operations. The Board will constantly
examine its size with a view to determine its impact upon its effectiveness.

The Directors appointed are qualified professionals who, as a group, possess a diverse range ofexpertise
to provide core competencies such as accounting or finance, business or management experience, industry
knowledge.

The Non-Executive Director and Independent Directors exercise no management functions in the Group.
The role of the Non-Executive Director and Independent Directors is particularly important in ensuring
that the strategies proposed by Management are fully discussed and rigorously examined and reviewing
the performance of Management in meeting agreed goals and objectives and monitor the reporting of
performance.

The Company co-ordinates informal meeting sessions for the Non-Executive Director and Independent
Directors to meet on a need-basis without the presence of the Management to discuss matters such as the
Group's financial performance, corporate governance initiatives, Board processes, succession planning as well
as leadership development and the remuneration of the Executive Directors.

Profiles of the Board are set out in "Board of Directors" section of this Annual Report.

Chairman and Chiefexecutive Officer ("CEO")

Principle 3: There should be a clear division of responsibilities between the leadership of the Board and
the executives responsible for managing the company's business. No one individual should represent a
considerable concentration of power.

Mr. Ang Yu Seng, the Executive Chairman and CEO, is also the controlling shareholder of the Company, takes
an active role in the Management of the Group.

The responsibilities of the Chairman include:

Scheduling of meetings to enable the Board to perform its duties responsibly while not interfering with
the flow of the Group's operations;

The Company Secretaries may be called to assist the Chairman in any of the above. As the CEO, Mr. Ang Yu
Seng is responsible for the overall management, strategic direction, ensuring that its organizational objectives
are achieved and the day-to-day operations of the Group.

The Board had appointed Mr. Siau Kai Bing as the Lead Independent Director to co-ordinate and to lead the
Independent Directors to provide a non-executive perspective and contribute to a balance of viewpoints on
the Board. He is the principal liaison on Board issues between the Independent Directors and the Executive
Chairman. He is available to shareholders when they have concerns or contact through the normal channels
of the Executive Chairman and CEO and Chief Operating Officer has failed to resolve or is inappropriate.

The Independent Directors, led by the Lead Independent Director, meet amongst themselves without the
presence of the other Directors where necessary and the Lead Independent Director will provide feedback to
the Chairman after such meetings.

Board Membership

Principle 4: There should be a formal and transparent process for the appointment and re-appointment of
Directors to the Board.

The Board, through the delegation of its authority to the NC, has used its best efforts to ensure that Directors
appointed to the Board possess the relevant background, experience and knowledge in business, finance and
management skill to enable the Board to make effective decision makings.

The NC comprises two (2) Independent Directors and one (1) Executive Director as follows:

Nominating Committee

Ms. Tan Min-LiMr. Ang Yu SengMr. Siau Kai Bing

(Chairman)

Based on the written terms of reference approved by the Board, the principal functions of the NC are:

Reviewing and making recommendations to the Board on all candidates nominated for appointment to
the Board of the Company and of its subsidiaries;

Reviewing and recommending to the Board on an annual basis, the Board structure, size and
composition, taking into account, the balance between Executive Directors, Non-Executive Directors
and Independent Directors to ensure that the Board as a whole possesses the right blend of relevant
experiences and core competencies to effectively manage the Company;

Procuring that at least one-third of the Board shall comprise Independent Directors;

Identifying and making recommendations to the Board as to which Directors are to retire by rotation
and to be put forward for re-election at each Annual General Meeting ("AGM") of the Company, having
regard to the Directors' contribution and performance, including the Independent Directors;

Determining whether a Director is independent; and

Proposing a set of objective performance criteria to the Board for approval and implementation,
evaluating the effectiveness of the Board as a whole and the contribution ofeach Director to the
effectiveness of the Board.

The NC is responsible for identifying and recommending new Directors to the Board, after considering the
necessary and desirable competencies. In selecting potential new Directors, the NC will seek to identify the
competencies required to enable the Board to fulfil its responsibilities. The NC may engage consultants
to undertake research on, or assess, candidates applying for new positions on the Board, or to engage
such other independent experts, as it considers necessary to carry out its duties and responsibilities.
Recommendations for new Directors are put to the Board for its consideration.

New Directors are appointed by way of a Board resolution following which they are subject to re-election at
the next AGM.

The Company's Constitution requires one-third of the Board (except for the Managing Director) to retire
by rotation at every AGM. Directors who retire are eligible to offer themselves for re-election. Pursuant to
Regulation 97 of the Company's Constitution, Directors of the Company who were newly appointed by the
Board since the last AGM will have to retire at the forthcoming AGM.

In considering whether an Independent Director who has served on the Board beyond 9 years is still
independent, the Board has taken into consideration the following factors:

The amount ofexperience and wealth of knowledge that the Independent Director brings to the
Company;

The attendance, active participation and ability to express his views independently at all times and
present constructive challenges on issues, in the proceedings and decision making process of the
Board and Board Commitee meetings;

Provision of continuity and stability to the Management at the Board level as the independent
Director has developed deep insight into the business of the Company and possesses experience and
knowledge of the business;

The qualifications of the Independent Director and his expertise provide reasonable checks and
balances for the Management;

The Independent Director has provided adequate attention and sufficient time has been devoted to
the proceedings and business of the Company. He is adequately prepared and responsive and heavily
involved in the discussions at the meeting; and

The Independent Director provides overall guidance to Management and acts as a safeguard for the
protection of Company's assets and shareholders' interests.

In this regard, the NC has conducted a rigorous review of the suitability of Mr. Siau Kai Bing being the
Independent Director who has served on the Board beyond 9 years and has determined that Mr. Siau Kai
Bing remains independent. Mr. Siau Kai Bing had abstained from voting on any resolution in respect of
his own appointment. In addition, the NC is of the view that Mr. Wong Loke Tan and Ms. Tan Min-Li are
independent (as defined in the Code) and are able to exercise judgement on the corporate affairs of the
Group independent of the Management.

Despite some of the Directors having other Board representations, the NC is satisfied that these Directors
are able to and have adequately carried out their duties as Directors of the Company. Currently, the Board
has not determined the maximum number of listed Board representations which any director may hold.
The NC and the Board will review the requirement to determine the maximum number of listed Board
representations as and when it deemed fits.

There is no alternate Director being appointed to the Board for the financial year ended 30 June 2018.

The NC has recommended to the Board that Mr. Ang Yu Seng and Ms. Tan Min-Li be nominated for re-election
under Regulation 91 of the Company's Constitution and Mr. Goi Kok Neng be nominated for re-election
under Regulation 97 of the Company's Constitution at the forthcoming AGM. The Board had accepted
the NC's recommendation.

Each member of the NC shall abstain from voting on any resolutions in respect of his or her re-nomination as
a Director.

The key information regarding Directors such as academic and professional qualifications, Board Committees
served, directorships or chairmanships both present and past held over the preceding three years in other
listed companies and other major appointments, whether the appointment is executive or non-executive are
set out in "Particulars of Directors pursuant to the Code of Corporate Governance" in the Annual Report.

Board Performance

Principle 5: There should be a formal annual assessment of the effectiveness of the Board as a whole and its
board committees and the contribution by each Director to the effectiveness of the Board.

While the Code recommends that the NC being responsible for assessing the Board as a whole and also
assessing the individual evaluation ofeach Directors' contribution, the NC is of the view that it is more
appropriate and effective to assess the Board as a whole, bearing in mind that each member of the Board
contributes in different way to the success of the Company and Board decisions are made collectively.

The NC has established a review process to assess the performance and effectiveness of the Board as a
whole, the Board Committees and individual self-assessment to assess each Director's contribution to the
Board's effectiveness. During FY2018, all Directors are requested to complete a Board Committees, Board
and Individual Director evaluation questionnaire designed to seek their views on the various aspects of the
Board's performance so as to assess the overall effectiveness of the Board. No external facilitator was used
during the evaluation process in FY2018.

The responses are collated and reviewed by the NC which then makes recommendations to the Board
aimed at helping the Board to discharge its duties more effectively. The appraisal process focuses on a set
of performance criteria which includes the evaluation of the size and composition of the Board, the Board's
access to information, Board processes and accountability, Board performance in relation to discharging its
principal responsibilities and the Directors' standards of conduct. Following the review, the NC is of the view
that the Board and its Board Committees operate effectively and each Director is contributing to the overall
effectiveness of the Board.

The Board and the NC have endeavoured to ensure that Directors appointed to the Board possess the
relevant experience, knowledge and expertise critical to the Group's business.

Access to Information

Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate
and timely information prior to board meetings and on an on-going basis so as to enable them to make
informed decisions to discharge their duties and responsibilities.

The Board has separate and independent access to the Senior Management and the Company Secretaries at
all times. Requests for information from the Board are dealt with promptly by the Management. The Board
is informed of all material events and transactions as and when they occur. The Management provides the
Board with quarterly reports of the Company's performance. The Management also consults with Board
members regularly whenever necessary and appropriate. The Board is issued with Board papers including
financial, business and corporate matters of the Group timely and prior to Board meetings to enable the
Directors to oversee the Company's operational and financial performance. Directors are also informed of any
significant developments or events relating to the Company.

The Company Secretaries or their representatives attend all Board and Board Committees meetings and
prepare minutes of Board and Board Committees meetings and assist the Chairman in ensuring that Board
procedures are followed and reviewed in accordance with the Company's Constitution so that the Board
functions effectively and the relevant rules and regulations applicable to the Company are complied with. The
Company Secretaries or their representatives' role is to advise the Board on all governance matters, ensuring
that legal and regulatory requirements as well as Board policies and procedures are complied with. The
appointment and removal of the Company Secretaries are subjected to the approval of the Board.

The Directors either individually or as a group may seek independent professional advice in furtherance of
their duties. The costs of such services will be borne by the Company.

REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Principle 7: There should be a formal and transparent procedure for developing policy on executive
remuneration and for fi xing the remuneration packages of individual Directors. No Director should be
involved in deciding his own remuneration.

The RC comprises three (3) Independent Directors as follows:

Remuneration Committee

Mr. Wong Loke TanMr. Siau Kai BingMs. Tan Min-Li

(Chairman)

The RC is established for the purpose ofensuring that there is a formal and transparent procedure for
developing policy on executive remuneration and for fi xing the remuneration packages of individual Directors.
The overriding principle is that no Director should be involved in deciding his or her own remuneration. It has
adopted written terms of reference that defines its membership, roles and functions and administration.

The duties of the RC are as follows:

Reviewing and recommending to the Board a framework of remuneration and specific remuneration
packages for all Directors of the Company;

Reviewing the service contracts ofexecutive Directors;

Reviewing and enhancing the compensation structure with incentive performance for key management
personnel; and

Overseeing the general compensation ofemployees of the Group with a goal to motivate, recruit and
retain employees and directors through competitive compensation and progressive policies.

No Director is involved in deciding his own remuneration, except in providing information and documents if
specifically requested by the RC to assist in its deliberations.

The RC has full authority to engage any external professional advice on matters relating to remuneration as
and when the need arises. The expenses of such services shall be borne by the Company.

In reviewing the service agreements of the Executive Directors and key management personnel of the
Company, the RC will review the Company's obligations arising in the event of termination of these service
agreements to ensure that such service agreements contain fair and reasonable termination clauses which
are not overly generous. The RC aims to be fair and avoid rewarding poor performance.

Level and Mix of Remuneration

Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk
policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to
provide good stewardship of the company, and (b) key management personnel to successfully manage the
company. However, companies should avoid paying more than necessary for this purpose.

The remuneration policy of the Company is to provide compensation packages at market rates, which reward
successful performance and attract, retain and motivate Directors and key Senior Management.

The Executive Directors' and key Senior Management remuneration packages are based on service
agreements and their remuneration is determined by having regard to the performance of the individuals,
the Group and industry benchmarks. The remuneration package for the Executive Directors and key
Senior Management staff are made up of both fixed and variable components. The variable component is
determined based on the performance of the individual employee as well as the Group's performance. The
service agreements of the Executive Directors have been renewed for a further period of 3 years with effect
from 1 July 2018. The Executive Directors do not receive Directors' fees.

The Company had on 11 February 2010 adopted the Union Steel Performance Share Scheme ("Union Steel
PSS") respectively subject to a maximum period of ten (10) years commencing on the adoption date. The
Executive Directors, Independent Directors and key management personnel are eligible to participate in the
Union Steel PSS in accordance with the Rules for Union Steel PSS.

Non-Executive Director and Independent Directors are paid Directors' fees of an agreed amount based
on their contributions, taking into account factors such as effort and time spent and the respective
responsibilities of the Directors. Directors' fees are recommended by the Board for approval at the Company's
AGM.

The Company does not use contractual provisions to allow the Company to reclaim incentive components
of remuneration from Executive Directors and key management personnel in exceptional circumstances of
misstatement of financial results or of misconduct resulting in financial loss to the Company. The Executive
Directors owe a fiduciary duty to the Company. The Company should be able to avail itself to remedy against
the Executive Directors in the event of such breach of fiduciary duties.

Directors' Remuneration

Principle 9: Every Company should provide clear disclosure of its remuneration policies, level and mix of
remuneration, and the procedure for setting remuneration, in the company's Annual Report. It should
provide disclosure in relation to its remuneration policies to enable investors to understand the link
between remuneration paid to directors and key management personnel, and performance.

A breakdown showing the level and mix of remuneration paid/payable for the financial year ended 30 June
2018 to each individual Director of the Company is as follows:

(1) Mr. Goi Kok Neng was appointed as the Non-Executive Director on 12 January 2018.

For the financial year ended 30 June 2018, the Company only identified 2 key management personnel. Details
of remuneration paid to Top 2 key management personnel of the Group (who are not Directors or CEO) for
the financial year ended 30 June 2018 are set out below:

For the financial year ended 30 June 2018, the aggregate total remuneration paid to the key management
personnel (who are not Directors or the CEO) amounted to S$606,000.

There were no terminations, retirement or post-employment benefits granted to Directors and key
management personnel other than the standard contractual notice period termination payment in lieu of
service for FY2018.

Immediate Family Member of Directors or CEO

There are two employees of the Group who are immediate family members of the Company's Executive
Directors. The remuneration of Mr. Ang Jun Long, son of Mr. Ang Yu Seng and Ms. Ang Ru Mei, Renne,
daughter of Mr. Ang Yew Chye did not exceed S$100,000 in the financial year ended 30 June 2018. The basis
for determining the compensation of our related employees is the same as the basis of determining the
compensation of other unrelated employees.

Details of remuneration paid to the immediate family member of Directors or CEO for the financial year
ended 30 June 2018 are set out below:

Save for the above disclosure, the Company does not have any employee who is an immediate family
member of a Director or CEO whose remuneration in the financial year ended 30 June 2018 exceeded
S$100,000.

In view of confidentiality of remuneration matters, the Board is of the opinion that it is in the best interests of
the Group not to disclose the exact remuneration of Directors and key management personnel in the Annual
Report.

ACCOUNTABILITY AND AUDIT

Accountability

Principle 10: The Board should present a balanced and understandable assessment of the company's
performance, position and prospects.

Accountability to our shareholders is demonstrated through the presentation of our quarterly and annual
financial statements, results announcements and all announcements on the Group's business and operations.

The Management provides the Board with appropriately detailed management accounts of the Company's
performance, position and prospects on a quarterly basis and when deemed appropriate by particular
circumstances.

In line with the SGX-ST Listing Rules, the Board provides a negative assurance statement to the shareholders
in respect of the interim financial statements.

The Management maintains regular contact and communication with the Board by various means including
the preparation and circulation to all Board members of quarterly and full year financial statements of the
Group. This allows the Board to monitor the Group's performance and position as well as the Management's
achievements of the goals and objectives determined and set by the Board.

RISK MANAGEMENT AND INTERNAL CONTROLS

Principle 11: The Board is responsible for the governance of risk. The Board should ensure that the
Management maintains a sound system of risk management and internal controls to safeguard the
shareholders' interests and the company's assets, and should determine the nature and extent of the
significant risks which the Board is willing to take in achieving its strategic objectives.

The Board is responsible for the overall internal controls framework, but acknowledges that no cost-effective
internal controls system will preclude all errors and irregularities. The system is designed to manage rather
than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not
absolute assurance against material misstatement or loss. The internal controls in place will address the
financial, operational, compliance and information technology risks, and the objectives of these controls are
to provide reasonable assurance that there are no material financial misstatements or material loss and
assets are safeguarded.

As the Group does not have a risk management committee, the Board and Management assume the
responsibility of the risk management function. Management is responsible for designing, implementing and
monitoring the risk management and internal control systems. Management reviews regularly the Group's
business and operational activities to identify areas of significant risks as well as appropriate measures to
control and mitigate these risks. Management reviews significant policies and procedures and highlights
significant matters to the Board and the AC.

Relying on the reports from the internal auditors ("IA") and EA, the AC carried out assessments of the
effectiveness of key internal controls during the year. Any material non-compliance or weaknesses in internal
controls or recommendations from the IA and EA to further improve the internal controls were reported to
the AC. The AC will also follow up on the actions taken by the Management and on the recommendations
made by both the IA and EA.

As the Group continues to grow and with the business environment evolving, the Board will continue to
review and take appropriate steps to strengthen the Group's overall system of internal controls. The Board
and the AC also noted that all internal controls contain inherent limitations and no systems of internal
controls could provide absolute assurance against the occurrence of material errors, poor judgment in
decision making, human error, losses, fraud or other irregularities.

The CEO and the Chief Operating Officer have assured the Board that:

The financial records have been properly maintained and the financial statements for the financial year
ended 30 June 2018 give a true and fair view of the Company's operations and finances; and

The Group risk management and internal control systems are operating effectively in all material
aspects given its current business environment.

Based on the reports and work performed by both the EA and IA, the assurance from Management and the
on-going review as well as the continuing efforts in enhancing controls and processes which are currently in
place, the Board, with the concurrence of the AC, is of the view that there are adequate and effective internal
controls and risk management systems in place for the Group to address financial, operational, compliance
and information technology risks of the Group as at 30 June 2018.

Audit Committee

Principle 12: The Board should establish an Audit Committee with written terms of reference which clearly
set out its authority and duties.

The AC comprises entirely of Independent Non-Executive Directors which are as follows:-

Audit Committee

Mr. Siau Kai BingMr. Wong Loke TanMs. Tan Min-Li

(Chairman)

The AC is established to assist the Board with discharging its responsibility of safeguarding the Company's
assets, maintaining adequate accounting records and developing and maintaining effective systems of
internal control. The Board is of the opinion that the members of the AC possess the necessary accounting or
related financial management qualifications, expertise and experience in discharging their duties. The details
of the Board member's qualifications and experience are presented in this Annual Report under the heading
"Board of Directors".

The AC has written terms of reference, setting out their duties and responsibilities, which include the
following:

monitor the integrity of the financial information provided by the Company;

assess and challenge, where necessary, the correctness, completeness, and consistency of financial
information (including interim reports) before submittal to the Board for approval or made public;

review any formal announcements relating to the Company's financial performance;

discuss problems and concerns, if any, arising from the interim and final audits, in consultation with
the EA and the IA where necessary;

assess the adequacy and effectiveness of the internal controls (including financial, operational,
compliance, information technology controls and risk management) systems established by
Management to identify, assess, manage, and disclose financial and non-financial risks (including those
relating to compliances with existing legislation and regulation) at least once a year in compliance with
Guideline 12.4 of the Code;

review and ensure that the assurance has been received from the CEO (or equivalent) and the Chief
Financial Officer (or equivalent) in relation to the interim/final unaudited financial statement;

review the IA's reports on the effectiveness of the systems for internal controls, financial reporting and
risk management;

monitor and assess the role and effectiveness of the internal audit function in the overall context of the
company's risk management system;

in connection with the terms ofengagement to the EA, to make recommendations to the Board on the
selection, appointment, reappointment, and resignation of the EA based on a thorough assessment of
the EA's functioning, and approve the remuneration and Terms ofengagement of the EA;

monitor and assess the EA's independence and keep the nature and extent of non-audit services
provided by the EA under review to ensure the EA's independence or objectivity is not impaired;

assess, at the end of the audit cycle, the effectiveness of the audit process;

review interested person transactions to consider whether they are on normal commercial terms and
are not prejudicial to the interests of the company or its minority shareholders; and

review the Company's procedures for detecting fraud and ensure that arrangements are in place by
which staff may, in confidence, raise concerns about possible improprieties in matters of financial
reporting, financial control, or any other matters.

Apart from the duties listed above, the AC is given the task of commissioning investigations into matters
where there is suspected fraud or irregularity, or failure of internal controls or infringement of any law, rule
or regulation which has or is likely to have a material impact on the Company's operating results or financial
position, and to review its findings.

The AC had evaluated the performance of the external auditors based on the key indicators of audit quality
set out in the Guidance to Audit Committees on Evaluation of Quality of Work performed by External Auditors.

The AC has full access to and the co-operation of Management and the full discretion to invite any Director or
Executive Officer to attend its meetings and has reasonable resources to enable it to discharge its functions
properly. The EA had unrestricted access to the AC.

The AC recommends to the Board on the proposals to the shareholders on the appointment, re-appointment
and removal of the EA and approving the remuneration of the EA. The AC has recommended to the Board the
nomination of Deloitte & Touche LLP for re-appointment as EA at the forthcoming AGM of the Company. The
Company confirmed that Rule 712 and Rule 715 of the Listing Manual of the SGX-ST had been complied with.

The AC will meet with the EA and the IA without the presence of the Management as and when necessary
to review the adequacy of audit arrangements with emphasis on the scope and quality of their audit, the
independence, objectivity and observations of the EA.

The AC conducted a review of all non-audit services provided by the EA and is satisfied that the nature and
extent of such services does not prejudice the independence and objectivity of the EA. For the financial year
ended 30 June 2018, the fees that are charged to the Group by the EA for audit services were approximately
S$191,000. There were no non-audit fees paid to the EA.

Anti-Bribery Compliance Policy

The Group has implemented an anti-bribery compliance policy to demonstrate its commitment and
provides standards of conduct for employees and third-party representatives to conduct its businesses in
a professional, fair, ethical manner and in compliance with anti-bribery and corruption laws in the various
jurisdictions in which the Group has its business presence. Training sessions are also conducted to educate
the Group's employees on the related topics.

As of to-date, there were no reports received through the anti-bribery channels.

Fraud Risk Management Policy

The Group has implemented a fraud risk management policy to prevent, detect and respond to incidents
of fraud. Any acts of fraud committed by employees or parties may face consequences such as disciplinary
warnings, termination ofemployment or other contractual relationship, and be reported to the appropriate
law enforcement or regulatory body.

Fraud risk assessment, fraud communication and training, background and due diligence checks are
preventive measures taken by the Group to detect fraud.

This policy is reviewed at least annually and revised, where applicable, to meet the changing needs of the
Group.

As of to-date, there were no incidents of fraud detected.

Whistle-Blowing Policy

The Group also has implemented a whistle blowing policy whereby accessible channels are provided for
employees to raise concerns about possible improprieties in matters of financial reporting or other matters
which they become aware and to ensure that:

independent investigations are carried out in an appropriate and timely manner;

appropriate action is taken to correct the weakness in internal controls and policies which allowed the
perpetration of fraud and/or misconduct and to prevent a recurrence; and

administrative, disciplinary, civil and/or criminal actions that are initiated following the completion of
investigations are appropriate, balance and fair, while providing reassurance that employees will be
protected from reprisals or victimisation for whistle blowing in good faith and without malice.

As of to-date, there were no reports received through the whistle blowing mechanism.

The AC is kept updated annually or from time to time on any changes to the accounting and financial
reporting standards by the EA. No former partner or director of the Company's existing auditing firm has
acted as a member of the AC.

Internal Audit

Principle 13: The Company should establish an effective internal audit function that is adequately resourced
and independent of the activities it audits.

The Company has outsourced its internal audit functions and has appointed a professional firm,
KPMG Services Pte. Ltd. as the IA. The IA reviews the effectiveness of internal controls as directed by the
Audit Committee. Procedures are in place for the IA to report independently on their findings and
recommendations to the AC for review. Management will update the AC on the status of the remedial action
plans. The IA has unfettered access to all the Company's documents, records, properties and personnel,
including access to the AC. The AC approves the hiring, removal, evaluation and compensation of the internal
audit function which the IA is outsourced.

The Board recognises that it is responsible for maintaining a system of internal control to safeguard
shareholders' investments and the Company's businesses and assets while the Management is responsible
for establishing and implementing the internal control procedures in a timely and appropriate manner. The
role of the IA is to assist the AC in ascertaining that the controls are effective and functioning as intended, to
undertake investigations as directed by the AC and to conduct regular in-depth audits of high risk areas.

Staffed by qualified professionals with the relevant qualifications and experience, KPMG has unrestricted
access to the AC. KPMG reports to the Chairman of the AC and the methodology is in conformance with the
International Standards for the Professional Practice of Internal Auditing of the Institute of Internal Auditors.

The AC is satisfied that the internal audit function has adequate resources to perform its function effectively.

The AC is satisfied that the internal audit team is staffed by suitably qualified and experienced professionals
with the relevant experience.

The AC reviews annually the adequacy and effectiveness of the internal audit function of the Company and
conducts meeting without the presence of the Management.

SHAREHOLDER RIGHTS AND RESPONSIBILITIES

SHAREHOLDER RIGHTS

Principle 14: Companies should treat all shareholders fairly and equitably, and should recognise, protect
and facilitate the exercise of shareholders' rights and continually review and update such governance
arrangements.

The Company does not practise selective disclosure. In line with the continuous obligations of the
Company under the SGX-ST Listing Manual and the Companies Act, Chapter 50, the Board's policy is that all
shareholders should equally and on a timely basis be informed of all major developments that impact the
Group via SGXNet.

Shareholders are informed of general meetings through the announcements released to the SGXNet and
notice contained in the annual report or circulars sent to all shareholders. These notices are also advertised
in a national newspaper. Shareholders are also informed on the procedures for the poll voting at the general
meetings. All Shareholders are entitled to attend the general meetings and provide the opportunity to
participate in the general meetings. If any Shareholders are unable to attend, he/she is allowed to appoint
up to two proxies to vote on his/her behalf at the general meeting through proxy forms send in advance. The
Company's current Constitution does not include the nominee or custodial services to appoint more than two
proxies.

On 3 January 2016, the legislation was amended, among other things, to allow certain members, defined as
"Relevant Intermediary" to attend and participate in general meetings without being constrained by the two
proxy requirement. Relevant intermediary includes corporations holding licenses in providing nominee and
custodial services and CPF Board which purchase shares on behalf of the CPF investors.

COMMUNICATION WITH SHAREHOLDERS

Principle 15: Companies should actively engage their shareholders and put in place an investor relations
policy to promote regular, effective and fair communication with shareholders.

The Company believes in high standards of transparent corporate disclosure and is committed to disclose
to its shareholders, the information in a timely and fair manner via SGXNet. Where there is inadvertent
disclosure made to a selected Group, the Company will make the same disclosure publicly to all others as
soon as practicable. Communication is made through:-

Annual Report prepared and issued to all shareholders. The Board ensures that the annual report
includes all relevant information about the Company and the Group, including future developments,
if any, and other disclosures required by the Companies Act, Chapter 50 and Singapore Financial
Reporting Standards;

Quarterly announcements containing a summary of the financial information and affairs of the Group
for that period;

Press releases on major developments of the Group; and

Notices of explanatory memoranda for AGMs and Extraordinary General Meetings ("EGM"). The notice
of AGM and EGM are also advertised in a national newspaper.

The Company's website at "http://www.unionsteel.com.sg" at which shareholders can access financial
information, corporation announcements, press releases, annual reports and profile of the Group.

By supplying shareholders with reliable and timely information, the Company is able to strengthen the
relationship with its shareholders based on trust and accessibility. The Company has engaged an investor
relations ("IR") firm to focus on facilitating the communications with all stakeholders, shareholders, analysts
and media on a regular basis.

To enable shareholders to contact the Company easily, the contact details of the IR firm are set out in the
Corporate information of the Annual Report as well as on the Company's website. The IR firm has procedures
in place for responding to investors' queries as soon as applicable.

The Company does not practice selective disclosure. Price sensitive information is first publicly released
through SGXNet, either before the Company meets with any investors or analysts. All shareholders of the
Company will receive the annual report with notice of AGM by post and published in the newspapers within
the mandatory period, which is held within four months after the close of the financial year.

The Group does not have a concrete dividend policy at present. The form, frequency and amount of dividends
declared each year will take into consideration the Group's profit growth, cash position, positive cash flow
generated from operations, projected capital requirements for business growth and other factors as the
Board may deem appropriate. For FY2018, the Board has recommended a final dividend of 1.2 cents per
share which is subject to shareholders' approval at the forthcoming AGM of the Company.

CONDUCT OF SHAREHOLDER MEETINGS

Principle 16: Companies should encourage greater shareholder participation at general meetings of
shareholders, and allow shareholders the opportunity to communicate their views on various matters
affecting the Company.

The shareholders are encouraged to attend the Company's general meetings to ensure a high level of
accountability and to stay informed of the Group's strategies and growth plans. Notice of the general
meetings are dispatched to shareholders, together with explanatory notes or a circular on items of special
businesses (if necessary), at least 14 clear calendar days before the meeting. The Board welcomes questions
from shareholders who wish to raise issues, either informally or formally before or during the general
meetings.

Each item of special business included in the notice of the general meetings will be accompanied by
explanation of the effects of a proposed resolution. Separate resolutions are proposed for each substantially
separate issue at general meetings.

All Directors, including the Chairman of the AC, NC and RC are normally present and available to address
questions relating to the work of their respective Board Committees at general meetings. Furthermore, the EA
are present to assist our Board in addressing any relevant queries by our shareholders.

The Company will make available minutes of general meetings to shareholders upon their request.

The Company acknowledges that voting by poll in all its general meetings is integral in the enhancement of
corporate governance. The Company adheres to the requirements of the Listing Manual of the SGX-ST and
the Code where all resolutions at the Company's general meetings held on or after 1 August 2015, are put to
vote by poll. The detailed results of each resolution are announced via SGXNet after the general meetings.
The Company has adopted electronic polls for all resolutions noted at the AGM held in FY2018.

DEALINGS IN COMPANY'S SECURITIES

In compliance with Rule 1207(19) of the SGX-ST Listing Manual, the Company had adopted a Code of Best
Practices to provide guidance to its officers on securities transactions by the Company and its officers.

The Company and its officers are not allowed to deal in the Company's shares during the period commencing
two weeks before the announcement of the Company's financial results for each of the first three quarters of
its financial year, and one month before the announcement of the Company's full-year financial results and
ending on the date of the announcement of the relevant results.

Directors and executives are also expected to observe insider-trading laws at all times even when dealing with
securities within the permitted trading period or when they are in possession of unpublished price-sensitive
information and they are not to deal in the Company's securities on short-term considerations.

MATERIAL CONTRACTS

There were no material contracts of the Company and its subsidiaries involving the interests of the CEO, each
Director or controlling shareholder, either still subsisting at the end of the financial year or entered into since
the end of the previous financial year.

INTERESTED PERSON TRANSACTIONS

The Company has established a procedure for recording and reporting interested person transactions ("IPTs").
All IPTs are subject to review by the AC to ensure that there were conducted on normal commercial terms and
are not prejudicial to the interests of the Company and its minority shareholders.

There were no IPTs and any of its interested persons (namely, Directors, CEO or controlling shareholders of
the Group or the associates of such Directors, CEO or controlling shareholders) subsisting for the financial
year ended 30 June 2018.